International business environment is multidimensional which involve political risk, cultural differences, exchange risk, legal and taxation issues. Therefore, it is comprises the political, economic, tax, regulatory, social & cultural as well as technological environments. In international business goods and services are exchange within individuals or business in various countries. International business occurs in several different formats such as movement of goods from one nation to another and Contractual agreements. Whereas, globalisation is a procedure of interaction as well as integration within companies, people and governmental bodies of different nation take place. This report is going to critically evaluate that international business is more regional or global level business. Because there are several factors which affect working of the organisation at international as well as global level. Along with this, implication of production strategies for chosen level of business will going to be highlighted in the
Impact of globalisation
Globalisation in the process in which people and organisation of different countries interact with each other. This procedure is driven by international trade, investment and so on as well as globalisation effect economic development, environment, culture and also on human physical well-being in societies around the world. Economic globalisation is that two or more nations are coming together as one big global economy as well as for making international trade easier. It give wide impact on every aspect of modern life and still continue to be a growing force This report is going to critically evaluate that international business is more regional or global level business. Because there are several factors which affect working of the organisation at international as well as global level. Along with this, implication of production strategies for chosen level of business will going to be highlighted in the assignment. in context of global economy. Impact of globalisation can be seen in both positive as well as negative over the economy of countries which influences growth of countries. It has been analysed globalisation have reduced production cost of countries as the business organisation can now set up their production plant where labours are skilled and less expensive as compared to their own country. As a result, it minimises production cost company and helps them in generating more ratio of revenue. Additionally, it has been evaluated that globalisation have collaborative increased opportunity for businesses to expand their operational activities beyond international boundaries which allows them to work in such a manner that maximises profitability ratio. Impact of globalisation of globalisation can also be see in the form of increased employment. It enables countries to operate their business in those countries where they can succeed. This increases options for local unemployed people as they can work in their domestic area and can also fulfil their basic requirement. This also results in reduction of unemployment at national as well as international level that directly contributes in increasing economy of countries.
Apart from this, negative impact of globalisation can be seen on various levels like shifting of local money to another countries, taking away job from domestic workers and mismanagement of companies confidential details. It has been analysed that globalisation has lead various drawback which have been observed by analysts. These barrier or drawback of globalisation are not only based on economical evaluation but it based on some other factors too which influences development of countries. Negative impact of globalisation can be analysed with the help of example. Large organisation are mainly placing their some of the offices in China as the country is successful in availing skilled labour in less salary. This increases productive rate of business organisation and allow helps them in maximising their profitability with excessive production level.
As per evaluation it has been analysed that globalisation has increased import and export of goods and services that actually leads to exchange of currency among countries who are actively involved in it. It can be said that globalisation has increased import and export of goods and services that actually leads to exchange of currency among countries who are actively involved in it. According to the overall analysis it can be said that even though impact of globalisation has both positive as well as negative aspect but if observance in done on the basis of evaluating whole world then impact of globalisation is positive on world economy.
Problems of globalisation are not negligible but as a whole globalisation have embraced world economy and contributed in development of whole world together in monetary terms. In order to support his statement, it can be said that globalisation has increased competition among the producers as with global environment companies have indulged into ventures and other collaboration for covering maximum market place. This have increased options for the buyer too as they will now purchase product from those companies who provides best products in less prices. This have enhanced demand for improvement in product and services for companies in order to create more value for their customers. As a result, this brings more innovation at market place and also avail hug range of products and services to customers which influences them to purchase it. It also creates global standard for companies to sustain longer at market place.
Mechanic of business going Global
Globalisation leads to collaboration of two or more countries and their businesses in order to expand their business at international level. It is essential for every organisation who is planning to expand their business in international to collaborate regional or neighbouring countries in order to enter global market place in effective manner and survive. It has been analysed that many of large countries have made their own regional relationships on the basis of feasibility and convenience. Regional economic integration is considered as the agreement between group of countries belongs to similar geographical location region in order to reduce various trade tariff for free flow of good and services and some other factors of related to manufacturing and production department with each other. Some of the common example of economical regional integration are ASEAN(Association of South-East Asian Nations), NAFTA (North America Free Trade Agreement), EU(European Union), APEC(Asian Pacific Economic Cooperation Forum). It is required by companies to follow mechanism while collaborating with regional countries at the time of going global. It is requires various points that is importantly to be considered by them. Some of them are described below that are mandatory to be follow while going global in international market:
Understand own product: It is important for business organisation to understand their own product as well as market place before entering at global market. It can be said that it is not always true that one company which is a leader in home country will also be a leader at market place. Therefore, it is suggested to businesses to initially conduct an research on foreign market, identify suitable market to expand and then analyse competitiveness of market place.
Formulate entry strategy: Another step of mechanics states that it is essential for companies to make a suitable market entry strategy before entering into global market in order to remain successful after launch. It is suggested to companies to go with joint venture while expanding at global level in order to minimise chances of failure in new market. It has been analysed that it is mainly companies spend much time as well as money on human resources as for establishing effective business at global level company requires a good staff which contributes in attaining companies goals and objectives. Along with this, company should also concentrate over supply chain management in order to their product effectively to customers from production to shipment.
Understand local compliance: The next step on which company is required to concentrate is to understand local compliance of global market or the particular location (country) where the company is planning to expand. For this, it is essential for the company to analyse to check legal procedure of establishment, incorporations, administrative procedures and directorship process in order to check level of its complexities at the time of expansion
As per the above mentioned report, it has been analysed that all of these mechanism are necessarily required by the company to follow while expanding its business at international level. Along with this, it is also required by these companies who also plan to collaborate with those countries who are related regional economic integration. As these regional countries are providing various kinds of benefits to their member country who works removes various barriers of trade like tariff, import- export duties, etc. It has been analysed that collaboration with these countries includes evaluation of different factors which might influence establishment of business at global level. These factor involves political and economical factor of regional integrated country. Feasibility of these factors with one of main Regional economic integrated countries like NAFTA is described as below:
NAFTA(North American Free Trade Agreement): It is an agreement between collaboration of USA, Canada and Mexico. It has been analysed that companies who operates in these countries are free to trade their goods and services within the specified region of three countries. It can be said that for expanding business in countries of NAFTA it is important for them to satisfy its political factor. This means company want to expand its business in these country is importantly belongs to its neighbour geographical location. It has been analysed that this political condition is related to economic factor too as it is less expensive for businesses to trade with neighbours as it is easier for them to operate quickly.
Concept of Regionalization and globalisation
Concept of Regionalization focuses on providing benefits to only those companies who operates their businesses within the boundaries of Regional economic integration. It has been analysed that companies who works at small scale initially focuses on entering into regional countries in order to expand their effectively and settle it in a new market positively. But, it is expected by these businesses only that establishing their business they should focus on going with the actual concept expansion that is to go global and contribute in the growth of whole world. It can be said that by having this kind of thought business organisation can grow themself as well as develop world economy.
It has been analysed that even though regionalization is the first choice of businesses as it is easier for them to enter into a new market and establish their business with less trade barrier. It also helps the businesses in generating more revenue that further contributes in expanding businesses more quicker with excessive flow of financial resources. Benefits of regionalisation can be seen best way through which companies can reach bigger market and more number of sources that helps them in settling down effectively at market place. As a result, companies are now able to influence interest of customers belongs to regional countries. Along with this it has been evaluated that maximum of regional countries removes their trade barriers, taxes, import-export duties and many other additional barriers that may affect growth of countries. This helps the businesses to expand easily while entering into the global market of regionalisation.
In addition to this, it can be said that as per the demand of global market, it is expected by then companies who have successfully established their businesses in regional country to now focus on globalisation. It has been analysed that main concept of global approach mainly supports to concept of globalisation instead of regionalisation because only by having support of regional countries a company succeed at global market.